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Importance of Capability Development

Question:

Discuss about the Effect on Capability Development through Discipline of Consultancy.

With the growth of competition, organizations are always trying to find innovation strategies so that they can sustain the brand value and reputation in the industry (Rockart and Dutt 2015). Often most of the organizations fail to evaluate the core organizational capabilities and therefore they fail to ensure balance between stakeholders’ expectation. One such reason is effective data analytics and market research. This has resulted in raising the requirement bar of capability development from executive consultant. This report will develop the executive consultant requirement for capability development and will also highlight the interrelationship between the two factors for organizational value creation.

The aim of this report is to identify the effect on capability development through discipline of consultancy.

Following are the report objectives

  • To evaluate capability development and discipline of consultancy
  • To reflect on the relevancy between capability development and executive consultant service
  • To identify the impact on value creation by effective capability development

Capability development places extreme importance on employees and their capacities. It focuses on the capabilities of the employees to perform at high level adjust with the rapidly changing work context and environment. Developing knowledge co-creation and skills of the employees is one of the important aspects of the capability development. According to Brandon-Jones, Knoppen and Van Raaij (2014), creation of capability is all about shifting from segmented actions to holistic action, which is more purposeful and meaningful. Being capable of applying differentiated skills, the employees can bring innovation in organization. On the other hand, Rahmandad (2012) opined that capability development focuses on development of team and individuals through strategic activities. The intension behind capability development is to meet business challenge, business goals and creating capacities for adjusting with organizational change. Competency defines acquisition of skills, attributes and knowledge, whereas capability defines the ability of the employees to apply those skills, attributes and knowledge in the organizational context. Moreover, professional development aspect of capability development centers at formal learning activities towards enhancing employees skills. 

One of the most important models of capability development is Holistic Model.  According to Lupton and Beamish (2016), holistic model supports the work team towards responding quickly, innovatively and effectively to the changing business environment and consumer needs. The life based learning philosophy defines the skills, attributes and knowledge of the employees cannot only be acquired in the workplace. These factors are also highly dependent on external work environment in which they reside. Outside environment of employees may define the potential activities, which they may do at their work. On the other hand, McGrath and O'Toole (2014) opined that shared commitment and understanding in the work culture outlines organizational values towards framing capability level of the employees. While the organization will have supportive mentor for employees, they will be able to demonstrate their innovative approach and confidence in their work areas.


Jiang, Malik and Guo (2015) opined that organization must have effective guiding principles for framing the capability development strategy. Therefore, an effective leader is highly required for identifying business issues and requirements. Based on those business requirements, the leaders would guide the employees for enhancing their capabilities. Moreover, organizational should adopt range of learning strategies in terms of on the job and off the job training towards skill development of the employees.

Holistic Model of Capability Development

Figure 1: Holistic Model of Capability Development

(Source: Apsc.gov.au 2016)

It is quite common assumption that consultant service is only needed for larger organizations. However, Business consultancy firm can improve the business performance of organizations of all sizes. The experts of business consultancy provides high quality and well informed advice on the business topics like commerce and empowering employees towards achieving maximum potential. According to (Onal Vural, Dahlander and George 2013), some catalyst like emerging IT innovation, declining market share, tightening environmental policies dramatically change the commercial landscape. In such situation, business consultancy provides effective advice on the matters of organizational Governance. They mostly provide suggestions regarding acquiring new tools and overseeing work force development. On the other hand, Schweitzer (2014) opined that opined that true success of organization could not come only through instinct, gut reaction and luck. Organization success is highly reliant on realistic approach in the context of external business environment. In such situation, business consultancy offers realistic analysis, careful calculations and practical strategic development in the context of external business environment. Therefore, organizations can take most realistic approach towards confronting business challenge and gain long-term success in every business aspect.


According to Hansen and Alewell (2013), the diagnostics of business consultancy act as professional leaders for overall organizational success. They analyze the specific organizational issues and business gaps whether it is related to development of human capital or proper allocation of financial resources. The HR diagnostics of the consulting firm identify the lack of skill level in the work group. After identifying gaps, the HR diagnostics provide effective training to the employees for enhancing their skills levels. Therefore, the employees become quite able to adjust with dynamic business environment and follow innovative ideas towards contributing in organizational success. On the other hand, Robert Mitchell and Shepherd (2012) opined that the role model of business consultancy offers deep insight on the business culture by identifying the behavior and emotional intelligence of the employees. They business consultants can create system of reward behavior towards aligning with changing organizational culture. The consults also offer effective succession planning for the employees towards initiating an inspiring work culture for the employees. It helps in enhancing productivity level of the employees towards effective organizational success.

According to McGrath and O’Toole (2016), the coaches of business consulting firms offer diverse group of experiences towards organizational growth. They align the learning needs of the employees with the requirement of business. The firms identify the gaps in the learning process of the employees and develop a concrete procedure for future progress. While considering the view of Apsc.gov.au. (2016), it can be found that capability building is the centralized part of organizational performance, which requires systematic learning and development approach guided by consulting firms for value enhancement. On the other hand, Australian Institute of Management (2016) proved that leadership and management framework are building blocks that make an organization capable enough to contribute in forming its benchmarking for effective performance. Furthermore, Joshi (2016) highlighted that capability development through business consultancy helps in encompassing various job roles and outcome through critical thinking and thereby ensuring organizational sustainability.

Role of Business Consultancies in Enhancing Organizational Performance


From the above discussion, it can be said that discipline of consultancy helps in developing organizational knowledge and a positive sense of stakeholder management. It is quite clear that with the growth of competition, an organization may not have the capability to ensure effective market data analysis but with the assistance from business consultants they can ensure innovation and mitigate challenge. Forstner, Kamprath and Röglinger (2014) pointed out that business consultancy acts as the trusted advisor for an organization so that professionalism can be enhanced to ensure positive outcome in future. Finally, it must be said that organization development can be only achieved by effective leadership who will guide the flow of operation in reaching future goals. In such case, executive consultancy proves to be the mentor in forming desired leadership approach and how the managers must act while controlling massive human resource. Therefore, from the discussion it is clear that assistance about both innovation and internal operation, discipline of consultancy acts as the supporting arm for leading a business towards success.

Figure 2: Relevance of Capability Development with Discipline of Business Consultancy

(Source: Hu, Lin and Chang 2013)

While considering the view of Robert Mitchell and Shepherd (2012), it can be said that value of an organization is only achieved when the purpose to fulfill stakeholder’s expectation is achieved. Consulting agencies while acting as the mentor or trusted advisor has only one motive, this is to ensure capability development for its client. Value of an organization is dependent on its performance but often the core competencies remain unknown, which is highlighted by business consultancies. With the expense of time and due to organization expansion, most of the organizations fail to keep a balance between its core values and stakeholder management. Such scenarios are quite common in most of the small scale enterprises of Australia. In order to gain revenue, organizations fail to ensure effective balance between employee expectation and client satisfaction resulting to deteriorate value. Such imbalances result in losing organizational reputation.

Executive consultancy helps in enhancing the organizational value by setting up strategies through balance scorecard, through which core stakeholder’s expectation and satisfaction is met. For manufacturing organizations, executive consultancy helps in analyzing the gap between organization’s production and market demand and based on that future scope of productivity development is proposed. By following such advices, organizations are able to increase the productivity and thereby ensure balance between its stakeholders, which helps in restoring organizational value.

Some of the most important advices that executive consultancies provide for developing capability are provided below:

  • The consultant provides access to competitive business environment report, from which the client organization gets to know about the richness of information that they needs to incorporate for their small business units
  • Client organizations get to know about the deemed to be important points that they need to incorporate so that they becomes sustainable to business
  • List of categories for performance evaluation is designed by the executive consultancy and the survey is done by taking response from top managers within the organization and from the outcome recommendations are designed
  • Based on the confidential information that the client organization will provide, the executive consultant will compare the points with Australian Management Capability Index and finally the most appropriate proceedings will be reported back
  • Executive consultant will generate the most customized report for its client organization where the exploration of learning and development programs will be highlighted, which will further help in boosting management capability

The number of consultancy firms in Australia is increasing but the most common points are listed above. From the above points, it can be found that consultancy agencies always try to create customized reports for their client organizations so that the competitiveness does not get hampered.  Some of the service oriented organizations in Australia are value oriented rather than hardcore profit earning but for them the consultancy firms try to ensure best quality without the expense of capital endorsement. With whatever be the procedure, consultancy firms try to ensure best quality service and client satisfaction through which organizational value is restored, which further helps in ensuring professionalism.


The whole paper has highlighted capability development by discipline of consultancy but some of the negative aspects of such service are pertaining to the degree of customization. The FMCG and IT industry of Australia is rapidly growing at present but against such sectors the target market is extremely common. This has somehow resulted in poor customized business progress report as product diversification and changing government regulation has made limited scope of customization. Most of the consultants are almost providing the same solutions to their clients and therefore competitive advantage is becoming negligible.

Conclusion

While concluding it can be said that organizations in Australia are extremely competitive but they often fail to gather market information through data analytics and thereby cannot ensure best strategy for sustainable business. In such a scenario, executive consultants help the organizations in setting up the most customized strategic business approach for future. It has been also found that most of the organizations in Australia are successful enough but they need to be ahead of rising competition and for that they need to innovate. Executive consultants help such organizations to gather relevant market statistics and evaluate those against client firm’s capability. Thus, it can be said that firm’s capability development can be best decided by professional executive consultants so that value is restored.

Reference List

Apsc.gov.au. 2016. Building capability: A framework for managing learning and development in the APS - APSC. [online] Available at: https://www.apsc.gov.au/publications-and-media/current-publications/building-capability [Accessed 15 Dec. 2016].

Australian Institute of Management. 2016. Organisational Capability Benchmarking. [online] Available at: https://www.aim.com.au/organisational-capability-benchmarking [Accessed 15 Dec. 2016].

Brandon-Jones, A., Knoppen, D. and Van Raaij, E., 2014, January. Strategic purchasing in dynamic capability development and deployment: A contingency perspective. In Academy of Management Proceedings (Vol. 2014, No. 1, p. 15165). Academy of Management.

Forstner, E., Kamprath, N. and Röglinger, M., 2014. Capability development with process maturity models–Decision framework and economic analysis. Journal of Decision Systems, 23(2), pp.127-150.

Hansen, N.K. and Alewell, D., 2013. Employment systems as governance mechanisms of human capital and capability development. The International Journal of Human Resource Management, 24(11), pp.2131-2153.

Hu, T.S., Lin, C.Y. and Chang, S.L., 2013. Knowledge intensive business services and client innovation. The Service Industries Journal, 33(15-16), pp.1435-1455.

Jiang, C.X., Malik, O.R. and Guo, C., 2015, January. What affects lean capability development of emerging market firms? An empirical investigation. In Academy of Management Proceedings (Vol. 2015, No. 1, p. 17330). Academy of Management.

Joshi, J. 2016. Managing Capability - New Avatar of L&D/HR ? Are we doing it right? - LearningCafe. [online] LearningCafe. Available at: https://learningcafe.com.au/managing-capability-are-we-doing-it-right/ [Accessed 15 Dec. 2016].

Lupton, N.C. and Beamish, P.W., 2016. The mutual construction of knowledge transfer and shared context in capability development within the networked MNC. Knowledge Management Research & Practice, 14(1), pp.150-157.

McGrath, H. and O’Toole, T., 2016. Using action research and action learning for entrepreneurial network capability development. Action Learning: Research and Practice, 13(2), pp.118-138.

McGrath, H. and O'Toole, T., 2014. A cross-cultural comparison of the network capability development of entrepreneurial firms. Industrial Marketing Management, 43(6), pp.897-910.

Onal Vural, M., Dahlander, L. and George, G., 2013. Collaborative benefits and coordination costs: Learning and capability development in science. Strategic Entrepreneurship Journal, 7(2), pp.122-137.

Rahmandad, H., 2012. Impact of growth opportunities and competition on firm-level capability development trade-offs. Organization science, 23(1), pp.138-154.

Robert Mitchell, J. and Shepherd, D.A., 2012. Capability development and decision incongruence in strategic opportunity pursuit. Strategic Entrepreneurship Journal, 6(4), pp.355-381.

Rockart, S.F. and Dutt, N., 2015. The rate and potential of capability development trajectories. Strategic Management Journal, 36(1), pp.53-75.

Schweitzer, J., 2014. Leadership and innovation capability development in strategic alliances. Leadership & Organization Development Journal, 35(5), pp.442-469.

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